“Younger Generations Will Still Lose Out“

PRESS RELEASE 13 July 2011

“Younger Generations Will Still Lose Out“

IF’s Response to OBR Report on Fiscal Sustainability

“Younger and Future Generations will still lose out,” warns Angus Hanton, Co-Founder of the newly established Intergenerational Foundation, in response to the Office of Budget Responsibility (OBR) Report on Fiscal Sustainability.

The figures, though bleak, still understate future liabilities by continuing to use a discount rate that is too high. The effect of using too high a discount rate is to understate the debts being passed on to future generations. The OBR Report looks at these debts but they risk being over-optimistic. When the government’s cost of borrowing is under 1% (index-linked gilt yield), using a discount rate of almost twice that rate cannot be justified.

The risks for younger generations are that real GDP growth may not reach 2% and many of today’s contingent liabilities will not crystallize until well after current policy-makers are retired.

Hanton adds, “This report is highly intergenerational and illustrates the level of debt that will be passed on to future generations. It is unfair to a younger generation already burdened by tuition fees, low employment, sky high rents and unaffordable house prices, who are also expected to contribute towards the over-generous pensions of the baby boomer generation whilst having a standard of living well below that of their parents.”

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Note to Editors:

The Intergenerational Foundation exists to promote the interests of younger and future generations in government policy-making. A Fact Sheet on Intergenerational statistics is attached.

Please contact Liz Emerson on mobile: 07971 228823 or liz@if.org.uk for further press information or to arrange an interview with Angus Hanton.